Analyst Ashwin Meht commented, "WPRO has been our least-preferred pick in tier 1 IT, given: 1) its weaker positioning in key markets (US/Europe); 2) well-entrenched competition in faster growing services for the industry (IMS/Engineering services); 3) limited progress in client mining; and 4) likely margin drag as it competes to close the gap with peers. These fears continue to play out with: 1) USD revenue -0.8% q-q and flattish organic growth guidance for 3Q, a seasonally strong qtr; 2) slowing momentum in IMS/Engineering services; 3) an 8% y-y decline at the top-10 clients; and 4) while margins were better in 2Q partly driven by better USD-INR realisation, we see continued pressure from dilutive acquisitions and the need to be disruptive or invest to regain growth. WPRO recorded a 4% organic USD revenue CAGR over FY12-16 and we expect a similar 3% over FY16-18F. Overall, we expect FY16-18F revenue/EPS CAGRs of 6%/1% and believe flat EPS growth and an uphill climb to regain growth will keep multiples depressed. Downgrade to Reduce with INR450 TP."

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